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Zim telcos face mounting headwinds

Jun 13 2017 17:15
Memory Mataranyika

Harare - There is pressure on Zimbabwean telcos to lower voice tariffs, experts said, citing the need to deepen promotional offerings in light of declining revenues from voice and a current cost analysis for the industry by the state telecoms sector regulator.

Analysts at IH Securities said in a report on Tuesday that the Zimbabwean telecom industry is expected to "remain highly regulated" which will likely play against Econet Wireless, one of the ZSE counters in which there is strong interest by foreign investors.

Other issues telcos in the country will grapple with include forex shortages to fund network expansion. Zimbabwe's liquidity crunch has continued unabated and the introduction of local bond notes - that trade at par with the United States dollar - has not effectively helped matters.

"We are of the opinion that prices will come down naturally, given the competitive landscape and the need to salvage voice revenues," said the analysts.

The industry is thus expected to remain highly regulated, with the regulatory authority, the Posts and Telecommunications Regulatory Authority of Zimbabwe (Potraz) currently undertaking a cost analysis meant to assess the pricing of the industry’s products.

Zimbabwean telcos currently charge 16 cents per minute for voice tariffs but there are a lot of promotional offerings in the industry that have further lowered the tariffs. It is now expected that these offerings will be deepened as competitive pressure forces industry players to offer low tariffs.

It is also expected that there will be new players in the industry in the form of Mobile Virtual Network Operators that will ride on already installed infrastructure. However, infrastructure sharing remains a thorny issue for Econet Wireless, which is owed $26m in interconnection fees by its rivals - NetOne and Telecel Zimbababwe.

"The highly regulated industry, competition from the emergence of MVNOs as well as failure to take advantage of investment opportunities due to lack of forex present downside risk to Econet," concludes the report.

The Zimbabwe government is now hard pressed to invest in NetOne and Telecel Zimbabwe, in which the state now has majority control after buying out VimpelCom.

Mobile operators in Zimbabwe are also saddled with pressing demands for more revenue contributions into state coffers. Econet Wireless recently said that out of every $1 collected in revenue, about 22 cents goes to the state in taxes and statutory payments.

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zimbabwe  |  telecommunications  |  economy
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